The US joined Japan in engineering one of the most notable rebounds in the yen since the currency began its years-long slide, a decline that’s stoked inflation in the Asian nation and rippled through global markets.
At the close of New York trading on Friday, the yen was quoted at 157.40 to the dollar, the strongest since early May. Just two days earlier it was flirting around the weakest levels since 1986, sounding alarm bells in Tokyo as rising import costs squeeze businesses and consumers.
The sharp gains were fueled by a combination of direct purchases of the yen, calls by officials to banks that trade the currency and jawboning from US Treasury Secretary Scott Bessent and Japanese Finance Minister Satsuki Katayama. Bessent, who has deep knowledge of Japan’s place in global markets from his hedge fund career, indicated that he thinks the yen is too weak.
While direct market intervention and verbal support have triggered rebounds before, only to see them fade away in days or weeks, the degree of coordination between the two countries now appears to be the tightest in decades, which has raised the stakes for traders betting against the yen.
Bessent’s commitment to shoring up the yen was clearly shown when Reuters published a photograph of a notepad in front of him at a cabinet meeting in Camp David on Friday. Under a “To Do” title, it was written “Buy Japanese Yen (JPY) $5-10 bil.”
